Diversification

The diversification of the Integrated structure of Almaz-Antei Corporation JSC (IS Corporation) is carried out with a view to develop and implement effective measures to use the potential of the IS Corporation to produce high-tech civil and dual-use products in demand on the sudsidiarymestic and foreign markets.

Terms, definitions, designations and abbreviations:

Project initiator – a subsidiary of the Corporation, a structural subdivision of the Corporation, any external (to the Corporation) entity, which proposes implementation of a civil and dual-use product manufacturing project.

Cooperation – a universal form of organization of joint and mutually agreed upon production with the participation of two or more partners, based on the distribution of production, commercial cooperation, mutual risks guarantee, joint investment protection and trade secrets.

Partner – a legal entity or an individual who participates jointly with the Corporation and (or) its subsidiary in implementing an investment project within the framework of diversification of civil and dual-use products.

According to a list of instructions to implement the Presidential Address to the Federal Assembly No. Pr-2346 of December 5, 2016 (cl. 1, g), the Government of the Russian Federation, in view of previously received instructions, needs to arrange for share increase of high-tech civilian and dual-use products in the total volume of products produced by organizations of the Defense industry, by 2020 – by no less than 17 percent, by 2025 – by no less than 30 percent, by 2030 – by no less than 50 percent.

The development strategy of the Integrated structure of JSC “AD Corporation “Almaz-Antey”, approved by the Board of Directors of the Corporation, is expected to diversify output products by optimizing and expanding the range of civil and dual-use products.

The limited number of military products is the main incentive for diversification and expansion of Corporation’s subsidiaries’ participation in the civil sector. In this regard, the Corporation’s goal is to increase the share of civilian products, since the main financial resources are concentrated in the civilian sectors.

When determining approaches to the diversification process, it is necessary to account for the fact that the Corporation’s enterprises are not focused on the production of civilian and dual-use products. In this regard, the Corporation is planning to create a system able to efficiently transit to the production of high-tech civilian and dual-use products.

Purpose of diversification. Target values.

The goal of diversification is to provide financial stability of the integrated structure of the Corporation in the context of changing priorities, while maintaining and developing the Corporation’s human, intellectual, technological and production potential and ensuring its effective development.

The target indicator of diversification development of civilian and dual-use products output is the share of civilian and dual-use products in total output: by 2020 – no less than 17%, by 2025 – no less than 30%, by 2030 – no less than 50%.

As part of the diversification process, the Corporation is engaged in production of high-tech civilian and dual-use products, used in the B2B and B2G markets.

Within the scope of implementing diversification

The Corporation plans to occupy leading positions (entry into TOP-10) for production of high-tech civil purpose products of in all sectoral and regional markets, where such products are sold.

In today's market-driven economy, especially when resolving diversification issues, it is necessary to combine the processes of initial identification of market niches for development and production of high-tech civilian and dual-use products, market planning for promotion of the issued civilian and dual-use products and their implementation.

The Corporation's Department for civil production development together with the specialists of the IS of the Corporation, as wells as external consultants, are developing and implementing "Regulations for the organization of development, production and implementation of high-tech civilian and dual-use products aimed at diversifying production of JSC “AD Corporation “Almaz-Antei", and also ensuring transfer of said Regulations to the Corporation's subsidiaries and the newly established joint ventures with the Corporation’s external partners and control of its implementation.